Former city administration cut corners on North Side grocery contract

Expressed fear new mayor would object to deal

Feb. 22, 2014

Former Binghamton's Director of Economic Development Office Merry Harris at a press conference in April 2013. Harris rushed through a contract with consultants to bring a new grocery to the North Side a day before the new city administration was to take over.

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• Representatives of the former city administration rushed into a contract with a consultant to bring a grocery to the North Side without City Council approval despite being warned the action was irresponsible. • The former head of Binghamton’s economic development office pushed through a contract 10 hours before the new city administration assumed control. • Former Mayor Matthew Ryan suspected the new administration would reject the contract with the consultant. • While the consultant that was to be hired to bring a new grocery to the North Side promotes itself as an expert in making deals with grocers, the Binghamton project would have been its first job in New York.

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Just 12 days before a new administration took over City Hall, an attorney told outgoing officials it was irresponsible to rush a contract potentially leaving Binghamton to pay $100,000 to try to bring a grocery to the North Side.

But they did it anyway.

The attorney, Patricia Cummings, warned that a city economic development agency had been asked to grant preliminary approval for a legal agreement without properly reviewing the issue, city records show.

“I’m not comfortable seeing this for the first time and making a decision today,” she said, addressing city officials during a Dec. 19 meeting of the Binghamton Local Development Corporation, or BLDC.

Cummings, whose legal practice is in Binghamton, made the comment as one of seven community members on the BLDC board, the city agency asked to approve the contract with UpLift Solutions, a New Jersey-based nonprofit, according to an audio recording of the BLDC meeting.

The last-minute push behind the contract eventually resulted in an outgoing official, Merry Harris, improperly approving the paperwork on New Year’s Eve, just 10 hours before her term ended as director of the Office of Economic Development.

A Press & Sun-Bulletin report on Jan. 9 about the improper expenditure prompted the new administration to formally revoke the legal agreement on Jan. 23.

Cummings declined to comment on the concerns she raised during the December meeting, when she ultimately changed her stance after outgoing city officials — including Harris and then-mayor Matthew T. Ryan — spent about 45 minutes urging BLDC board members to approve the contract.

The effort stemmed from a long-standing and politically charged push to attract a grocer to the North Side, which has gone without one since the mid-1990s.

Responding to Cummings’ comment during the December meeting, Ryan, a Democrat, said incoming mayor Rich David, a Republican, had different plans for addressing the neighborhood’s problems, the audio recording shows.

“Quite frankly, one of the reasons that I want to do it today is because there’s going to be a new person sitting here next year, and I think that person might vote against this,” Ryan said.

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While campaigning last fall, David announced he struck an informal deal to bring a year-round farmers market to the Binghamton Plaza, which would provide fresh produce, fish and meats to the North Side community.

Following the January report, Ryan said his administration acted appropriately in trying to hire UpLift Solutions, which specializes in bringing groceries to under-served communities.

“At the end of the day, we worked very hard to get a grocery store,” he said.

'Ethically questionable'

During the December meeting, Harris told BLDC board members at least three times that the contract would require further approval by Binghamton City Council.

Then, 12 days later Harris improperly approved the paperwork when she signed and faxed it to UpLift Solutions on Dec. 31.

One BLDC board member had even asked a question that addressed that same scenario.

“We could approve it, but we can’t sign a contract until City Council approves of it, correct?” asked Ron Sall, a city businessman and BLDC board member.

The audio recording shows Harris responded by saying, “Uh, huh,” before she noted the Dec. 19 vote by the BLDC would mean the city agency granted preliminary approval for the contract.

Harris declined a request to discuss the audio recording, reiterating a previous statement that she mistakenly thought the expenditure didn't require City Council approval.

Reacting to the improper expenditure, David said he is reviewing city ethics policies, with a goal of potentially proposing new regulations in the near future.

“I thought those actions were ethically questionable,” he said, referring to the last-minute push by outgoing officials to approve the contract.

Addressing David’s comment, Ryan said an administration is “allowed to work to the last minute.” The Democrat reached his two-term limit in 2013.

Ryan said he also spoke with Harris before she signed the contract and faxed it out.

“I left it up to her professional judgment,” Ryan said, adding he advised Harris to seek an opinion from Kenneth Frank, corporation counsel for Binghamton, who was not available on New Year’s Eve.

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Ryan also praised Harris for leading the Office of Economic development since 2006, reiterating his comments during the Dec. 19 meeting, when he declared it “Merry Harris Day” in Binghamton, just minutes after the BLDC approved the contract with UpLift Solutions.

David said he also plans to review BLDC policies related to contracts to consider requiring additional oversight of the city agency.

The contract

While UpLift Solutions touts itself as an expert in making deals with grocers, the now-canceled contract with Binghamton would have been its first job in New York.

Additionally, the nonprofit spends a majority of its money on administrative costs under an agreement with a for-profit New Jersey grocery business, Brown’s Super Stores Inc., which is disclosed as a potential conflict of interest, according to federal tax filings for 2011 and 2012.

When told about the federal tax filings, Ryan said he was unaware of the situation.

“We didn’t study the whole corporate structure,” he said, adding the $100,000 contract was based primarily on BLDC discussions that started around June 2013, along with other factors.

The BLDC board that approved the contract consists of seven community members appointed by the mayor, two City Council members and four other city officials, including the mayor.

“I would do more research for buying a refrigerator than we got for making the decision to spend $100,000,” he said.

Under the proposal, UpLift Solutions would have been guaranteed a $75,000 fee to perform a range of duties, such as studying the location and negotiating with grocers.

Another $25,000 payment would be made to UpLift Solutions if a grocer signed a lease to open in the community, the proposal shows.

The nonprofit

Councilwoman Lea Webb, D-4th District, spearheaded the effort to hire UpLift Solutions. She serves on the BLDC board and represents the North Side community that has gone without a grocer.

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The attempt to hire UpLift Solutions followed the BLDC’s failed efforts to attract a grocer, including in 2009, when the city agency bought a property at 10-12 W. State St. for about $90,000. City officials then worked with a developer seeking to open a Save-A-Lot grocery at the site, but the project never materialized.

Residents have been calling for a new full-size grocery since 1996, when Grand Union left the 31 W. State St. plaza, which is owned by Wayne, N.J.-based Galesi Realty.

Webb first mentioned UpLift Solutions during a BLDC meeting on June 27, 2013, when she proposed paying the nonprofit $3,000 to study the feasibility of opening a grocery in that area, according to meeting minutes.

Binghamton paid the nonprofit about $1,200 for the study, which produced a page and a half report about UpLift Solutions’ review of long-standing conditions in that area.

The page and a half report was the lone document used to support the push for Binghamton to proceed with the $100,000 contract, Papastrat said.

Webb did not respond to requests for comment about the situation.

In August, the BLDC applied for a state grant for $100,000 to hire UpLift Solutions, before learning it was rejected in December.

On Dec. 19, the BLDC passed the resolution on Dec. 19 approving the $100,000 contract with UpLift Solutions. This money would come from the federal Urban Development Action Grants program administered by the city agency, the resolution shows.

The conflict of interest disclosures show Brown’s Super Stores Inc. provides various services to UpLift Solutions, including paying salaries for the nonprofit employees, according to federal tax filings.

For example, of the nearly $800,000 in total spending reported for 2012, about $178,000 was paid by Brown’s Super Stores as compensation to Mike Basher, executive director of UpLift Solutions, the filings show.

Jeffrey Brown is owner of the supermarket business, which is based in Westville, N.J. and connected to the Shop Rite chain. He also serves as chairman of the Board of Directors for UpLift Solutions.

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Basher and Brown did not respond to requests for comment.

Donna Leuchten, a spokeswoman for UpLift Solutions, said the nonprofit discloses potential conflicts of interest under an internal policy signed by members of the Board of Directors, including Brown.

Since it started operating in 2009, the nonprofit has also conducted annual independent audit reports that found no wrongdoing, she said.

While the nonprofit’s website lists success stories, a majority are connected to training programs and other forms of outreach.

Leuchten said three of 10 communities had grocery stores open under contracts similar to the one proposed in Binghamton, though she would not provide other details. The remaining seven communities have signed contracts and are awaiting a grocer, she said.